Stock Based Compensation

9 Months Ended

Sep. 30, 2011

Stock Based Compensation [Abstract]

STOCK BASED COMPENSATION

NOTE 11 — STOCK BASED COMPENSATION

We have issued stock-based awards in the form of stock options for certain employees and officers. We recorded total stock compensation expense of $2.1 million both for the nine months ended September 30, 2011 and 2010 ($0.7 million and $1.2 million for the third quarter of 2011 and 2010, respectively). The compensation expense is principally included in Selling, General and Administrative Expenses in the accompanying Condensed Consolidated Statements of Operations.

Below is a summary of the different types of stock-based awards issued under our stock plans:

Stock Options

Service-based Options. These options are granted at fair market value on the date of grant. The options generally vest over four years with equal annual cliff-vesting and expire on the earlier of 10 years after the date of grant or following termination of service. A total of 1.1 million service-based awards were outstanding at September 30, 2011.

Market-based Options. These option grants have two components each of which vest only upon the achievement of certain criteria. The first component, which we refer to internally as “ordinary performance” grants, consists of two-thirds of the market-based grant and begins to vest if the stock price realizes a compounded annual gain of at least 20% over the exercise price, so long as the stock price is at least double the exercise price. The remaining third of the market-based options, which we refer to internally as “extraordinary performance” grants, begins to vest if the stock price realizes a compounded annual gain of at least 25% over the exercise price, so long as it is at least triple the exercise price. The vesting schedule for all market-based awards is 25% upon achievement of the criteria and the remaining 75% in three equal annual installments. A total of 2.2 million market-based awards were outstanding at September 30, 2011.

The Company granted 0.2 million stock options (at an average price of $33.15) and 0.9 million stock options (at an average price of $23.54) during the nine months ended September 30, 2011 and 2010, respectively.

The fair value of the service-based options was determined using the Black-Scholes options pricing model while a lattice (binomial) model was used to determine the fair value of the market-based options using the following assumptions as of the grant date:

	September 30, 2011						September 30, 2010
	Black-Scholes			Binominal			Black-Scholes			Binominal
Risk-free Interest Rate		1.69%–1.93	%		0.04%–3.03	%		2.82%–3.20	%		0.02%–3.66	%
Expected Stock Price Volatility		48	%		55.70%–55.80	%		48	%		52	%
Expected Dividend Yield		—			—			—			—
Expected Option Life (in years)		6.25			—			7			—
Contractual Life (in years)		—			14			—			10
Fair Value	$	16.33–$17.85		$	16.91–$20.39		$	11.71–$13.00		$	10.05–$12.35

The following table summarizes the weighted-average fair value of stock options granted, and the total intrinsic value of stock options exercised:

	September 30
(in thousands, except per share amounts)	2011		2010
Weighted-Average Fair Value at Date of Grant Per Share	$	17.66	$	11.60
Intrinsic Value of Options Exercised	$	4,193	$	5,024
Fair Value of Options Vested	$	2,240	$	208

Stock-based compensation expense is recorded net of estimated forfeiture rates ranging from 1% to 3%.

As of September 30, 2011, estimated unrecognized compensation costs related to share-based payments amounted to $7.7 million which we expect to recognize over a weighted-average remaining requisite service period of approximately 3.2 years.

The following table summarizes activity of our stock options:

						Weighted
				Weighted		Average
				Average		Contractual		Aggregate
	Number of			Exercise		Term		Intrinsic Value
	Options			Price		(in years)		(in thousands)
Outstanding at December 31, 2010		3,451,613		$	13.46		7.3	$	52,641
Granted		181,000			33.15
Exercised		(206,661	)		11.36
Forfeited		(155,579	)		24.52
Outstanding at September 30, 2011		3,270,373		$	14.15		6.9	$	69,546
Exercisable at September 30, 2011		1,453,964		$	10.27		5.9	$	36,522

Stock Repurchase Authorization

On May 19, 2010, our shareholders authorized us to purchase up to 3.8 million shares of our common stock in the open market. From authorization through September 30, 2011, we have purchased 1.7 million shares of our common stock on the open market at an average price of $31.02, leaving 2.1 million shares still available for purchase under the program.